Alabama scuttles plans for managed care

Alabama is backing off plans to transition its Medicaid program from a fee-for-service structure to managed care.

State officials said the ongoing uncertainty of Medicaid funding sparked the change. Congressional Republicans have said they hope to cap funding for the program as part of their healthcare reform package. Alabama's program was set to launch in 23 counties on Oct. 1, 2017.

Instead, the state plans to seek other yet-to-be-determined changes to its Medicaid program, according to a notice posted Thursday on Alabama's Medicaid website.

Hospitals were disheartened by the news given that the state had been promising since 2013 to make the change to managed care.

"Our hospitals have been working to prepare for the implementation," said Danne Howard, executive vice president at the Alabama Hospital Association. "Many have invested a significant amount of time and resources into the effort."

The state also said the mega managed Medicaid rule released last year also affected their plans for the program.

Managed-care contracts that started on or after July 1 will have to comply with the new requirements, which the CMS says will improve the rate-setting process and make plans' spending more transparent.

The new requirements include stricter standards to ensure that managed-care rates are actuarially sound and cover all medical and administrative costs, taxes and fees for which the health plan is responsible.

Despite promises to shift more regulatory autonomy to the states, the Trump administration announced in June that it was letting the Obama-era Medicaid managed-care rules stand.

The state's planned switch to managed care had already been delayed, as it was supposed to begin in April of last year, but the CMS agreed to a delay after the state complained about budget woes.

As part of it's managed-care plan, Alabama passed legislation in 2013 to implement regional care organizations, its version of accountable care organizations. The groups would have been managed by local providers, which were to receive fixed per-capita payments to deliver healthcare services to Medicaid beneficiaries.

More than 650,000 of Alabama's 1 million Medicaid recipients were to receive their care through regional care organizations, operating in five areas of the state. Eleven local providers had been approved by the state so far to participate, with at least two providers per region.